PEO Vs Staffing Services – What’s The Difference?

Although employee leasing companies are similar to staffing companies, there are a few major differences.

Focus on Profit with a PEO

The biggest difference between the two is the ownership of the employees. With an employee leasing company (or PEO), the employer has a shared relationship over their employees for the purposes of payroll processing, workers’ compensation insurance coverage, benefits administration, and HR services.

A PEO’s main benefit to an employer is to relieve the tasks and stress (and real underlying costs) of dealing with employee administrative issues – such as payroll, employee benefits, human resources and workers’ compensation. Using an employee leasing company is a cost-effective way to outsource excessive administrative duties so that the owners and employees can focus on the profitable functions of the business.

The more employees a company hires, the more employee related tasks they will have to manage. This is where an employee leasing comes in and helps alleviate hassles and streamline processes that save a business time and money.

What About Staffing Companies?

With a staffing company, you are essentially renting temporary employees. When obtaining employees this way, you will be able to request the temps based on their skill sets and the operations you need them to perform. A business benefits by using a staffing agency or temporary service in variety of ways, most notable is the ability to access short-term help immediately.

Once an employee is assigned by a staffing agency to work for you, their workers’ compensation insurance, taxes and wages are paid by the staffing company. However, there is a premium to pay for this kind of short-term service. The overall employee-related costs will be much higher, including premiums that are added for using their staffing services. The added risks and administrative costs for the services provided is why staffing companies are most commonly used as a temporary solution.

Staffing companies can be helpful for businesses that only need seasonal or temporary help for a project. Long term though, they can be very expensive.

If you’re a business that’s starting to hire permanent employees, the most cost-effective option will usually be an employee leasing company.

Whether you decide to use an employee leasing company or a staffing company for your employment needs will be up to you.

Be sure to review your options carefully. If you’re still not sure which option is right for you, one of our friendly team members would be glad to help!

Contact us today!